Luo Weit­eng We have been climb­ing the learn­ing curve for quite a long time, which equips us with a world of know-how, to in­te­grate the on­line with off­line and pro­vide clients with a to­tal so­lu­tion.”

Charles Sch­wab placed its trust in Hong Kong at a time when for­eign in­vestors were ea­ger to flflee. Eigh­teen years on, it is be­ing proven right. gets the story.

China Daily (Canada) - - FRONT PAGE -

An “ad­ven­turer” — that is how Bei­jing-born bro­ker­age whiz James Sun likes to de­scribe him­self. The Charles Sch­wab Hong Kong man­ag­ing direc­tor, an out-and-out Bei­jinger, born and bred, set off on his US ex­pe­di­tion as a stu­dent more than two decades ago.

Next came watch­ing his ca­reer take off with the San Fran­cisco-head­quar­tered Charles Sch­wab Corp and, af­ter 17 years at the bro­ker­age house and banker’s New York of­fices, Sun packed his things once again and moved to Hong Kong in 2004, to take charge of Charles Sch­wab’s en­tire Asian busi­ness.

His firm was al­ready a few steps ahead of him, hav­ing landed in the Eastern hemi­sphere’s in­ter­na­tional me­trop­o­lis a good seven years be­fore.

Charles Sch­wab en­tered the Hong Kong mar­ket in 1997, the year of the han­dover and the Asian fi­nan­cial cri­sis. That may not have seemed like per­fect tim­ing, es­pe­cially as for­eign in­vestors were rush­ing to with­draw cap­i­tal from the soon-to-be-for­mer Bri­tish colony.

But de­spite the per­ceived flux, Charles Sch­wab re­mained bullish on the prospects of Hong Kong and the main­land, and placed its bets on the city as a long-term wealth man­age­ment bridge­head for busi­ness ex­pan­sion in Asia. “Our en­try (into the re­gion) at that time stood as an act of op­ti­mism and a vote of con­fi­dence for the out­look on Hong Kong and the main­land,” said Sun.

“It also stood as proof of our longterm com­mit­ment, in a bid for longterm par­tic­i­pa­tion in the devel­op­ment story of Hong Kong and the main­land.”

More im­por­tantly, the main­land was at the time experiencing a sit­u­a­tion some­what sim­i­lar to that un­der­gone by the US sev­eral years back.

The world’s largest econ­omy, boasting a huge in­vestor base like the main­land did dur­ing the late 1990s, had then seen a huge mar­ket gap where emerg­ing af­flu­ent in­vestors wanted to han­dle their money wisely but had no idea about how to do so.

Charles Sch­wab be­lieved such a gap was and would con­tinue to be the hard fact on the main­land, where the bro­ker­age’s know-how on the is­sue, which proved a win­ner in its na­tive US, may be given full play.

“We spot­ted the ex­cit­ing mar­ket pos­si­bil­i­ties and felt we re­ally needed to cap­i­tal­ize on the ex­plo­sive growth in the re­gion and be part of the com­pelling story of a boom­ing econ­omy,” said Sun.

“Eigh­teen years on, it has been proven that we made the right choice to use the Hong Kong of­fice as a hub for our Asian busi­ness.”

“That de­ci­sion, that op­ti­mism and that com­mit­ment are ben­e­fit­ing us to­day and will surely ben­e­fit us in the fu­ture.”

The main­land is cur­rently the third­fastest pro­ducer of high-net-worth in­di­vid­u­als (HNWI), af­ter Ja­pan and Kuwait. In 2013, the world’s sec­ond­largest econ­omy saw cit­i­zens with more than $1 mil­lion in in­vestable as­sets grow by 17.8 per­cent over 2012, tak­ing the to­tal to 758,000, ac­cord­ing to the World Wealth Re­port 2014 re­leased by Capgem­ini and RBC Wealth Man­age­ment last June.

The sheer size of the HNWI pop­u­la­tion in the re­gion trans­lated into the sub­stan­tial con­tri­bu­tion of the Charles Sch­wab Hong Kong of­fice to the group’s busi­ness pie.

In fact, set­ting up a Hong Kong of­fice, the only one so far in Asia, was a strate­gic move to cre­ate a hub for the group’s Asian busi­ness. As much as 41 per­cent of new clients’ cash in Charles Sch­wab’s in­ter­na­tional busi­ness, that is, out­side the US, came from Asia last year. But that does not mean Charles Sch­wab has the Hong Kong field all to it­self.

Bro­ker­ages num­ber in their hun­dreds in Hong Kong, a city of seven mil­lion peo­ple. More than 550 bro­ker­ages com­pete for busi­ness in the SAR’s open mar­ket, with the top 14 ac­count­ing for more than half of turnover and the big­gest 65 ac­count­ing for more than 90 per­cent of turnover in Fe­bru­ary, ac­cord­ing to data from the Hong Kong Stock Ex­change.

Charles Sch­wab, how­ever, has what it takes to gain more than a foothold in the overly crowded lo­cal mar­ket.

“All over the US and across the globe, we are a real suc­cess story for on­line in­vest­ing,” noted Sun.

Charles Sch­wab is ar­guably the largest on­line bro­ker in the world, boasting 9.5 mil­lion ac­tive bro­ker­age ac­counts and client as­sets to­tal­ing $2.5 tril­lion as of March-end this year. By com­par­i­son, as of Dec 31, its USbased global ri­vals E*Trade Fi­nan­cial Corp and TD Amer­i­trade had cus­tomer as­sets of $290.3 bil­lion and $672.4 bil­lion, re­spec­tively, while the fig­ure at Charles Sch­wab was $2.46 tril­lion.

Client ac­counts at the 2014 yearend were 4.8 mil­lion at E*Trade and six mil­lion at TD Amer­i­trade, against nearly 10.4 mil­lion at Charles Sch­wab.

As a mar­ket leader, Charles Sch­wab has es­tab­lished it­self as more than an on­line plat­form.

It is ded­i­cated to con­nect­ing on­line el­e­ments with peo­ple el­e­ments or off­line ser­vices, in­clud­ing wealth man­agers, branch ser­vices and hot­lines, to of­fer a to­tal ex­pe­ri­ence for clients, ob­served Sun.

In re­cent years, there has been a lot of buzz in the re­gion about the lu­cra­tive busi­ness of on­line in­vest­ing.

This tempt­ing mar­ket trend, though it has got a great many peo­ple ex­cited, is still re­garded as a mere tool for wealth cre­ation.

“It’s an easy trap to fall into,” said Sun. “The point is on­line can never work with­out peo­ple — say, clients and client man­agers — in the in­dus­try. On­line bro­kers should de­velop a clear pic­ture as to what kind of ser­vices are suit­able for on­line plat­forms and what other ser­vices — such as fi­nan­cial plan­ning, as­set al­lo­ca­tion and con­struc­tion —are fit for man­agers deal­ing with clients face-to-face.” Clients do not just want to make money, but also value a good hu­man touch, he added.

De­spite hav­ing built on its po­si­tion in on­line in­vest­ing for two decades, Charles Sch­wab is still find­ing its way around this promised land. Sun be­lieves it re­ally takes time for on­line in­vest­ing to im­prove and ma­ture.

“There is a learn­ing curve that ev­ery mar­ket player must climb,” he noted. “As a mar­ket leader, we have been climb­ing the learn­ing curve for quite a long time, which equips us with a world of know-how, to in­te­grate the on­line with off­line and pro­vide clients with a to­tal so­lu­tion.”

Such know-how can be de­scribed, bor­row­ing a term from the Amer­i­can Cham­ber of Com­merce in Hong Kong, as for­eign di­rect ex­per­tise, added Sun. “This is where our core com­pe­tence lies and how we dif­fer­en­ti­ate from other com­peti­tors in the re­gion,” he pointed out.

But that does not mean Charles Sch­wab can rest easy in the re­gion. The chal­lenge, how­ever, of­ten comes from the clients’ side. Sun has seen a lot of clients and green­horn in­vestors bom­bard him with ques­tions like: “Tell me, what are the good stocks to buy? Is it a good time for me to get in? Is it a good time for me to buy or sell?”

But what ex­pe­ri­enced and so­phis­ti­cated in­vestors are con­cerned about al­ways goes be­yond sim­ple buy-and­sell tech­niques, noted Sun.

They hit the in­vest­ing road by ask­ing them­selves first: “What is my goal? Do I have an in­vest­ment plan and how do I im­ple­ment it? Can your com­pany help me im­ple­ment this plan? How can I take re­spon­si­bil­ity of my own fi­nan­cial fu­ture by par­tic­i­pat­ing in the in­vest­ment mar­ket?”

The move to en­ter a mar­ket — no mat­ter whether it is Charles Sch­wab step­ping into Hong Kong in 1997 or a so­phis­ti­cated in­vestor get­ting into a field, an in­dus­try or even a na­tion’s econ­omy amid signs of volatil­ity — should be in­ter­preted as an act of op­ti­mism, said Sun.

With high hopes that to­mor­row will be bet­ter and with their bets rid­ing on the fu­ture, in­vestors troop in, hop­ing to join in the devel­op­ment story here in the long run.

“In­vest­ment should be a long-term com­mit­ment rather than a quick inand-out,” said Sun. “It is not about buy­ing par­tic­u­lar stocks at a par­tic­u­lar time and pick­ing the right stocks.”

“Rather, it is about par­tic­i­pat­ing with op­ti­mism, with long-term per­spec­tive and a di­ver­si­fied port­fo­lio.”

In that sense, in­vestor ed­u­ca­tion, still at its nascent stage on the main­land, is how Charles Sch­wab makes its strong pres­ence felt in the re­gion.

“Be­cause peo­ple don’t know what they don’t know,” said Sun.

“They need to have some­one around to teach them how to in­vest in a more re­spon­si­ble way in­stead of be­ing a short-term trader.”

“That is the kind of role that Charles Sch­wab could ex­pect to play.”

Ac­cord­ing to a Study of Emerg­ing Af­flu­ent In­vestors in Ur­ban China re­leased by Charles Sch­wab and Ts­inghua Uni­ver­sity’s School of Eco­nomics and Man­age­ment in Jan­uary, as a na­tion of savers, 89 per­cent of main­land in­vestors sur­veyed had parked their sav­ings in cash or cash­like prod­ucts, while three-quar­ters owned some stocks or bonds.

“What was sur­pris­ing is that many in­vestors’ at­ti­tudes are not aligned with their be­hav­ior,” said Lisa Hunt, ex­ec­u­tive vice-pres­i­dent for in­ter­na­tional ser­vices and spe­cial busi­ness devel­op­ment at Charles Sch­wab’s Wash­ing­ton of­fices.

She pointed out that 41 per­cent of in­vestors sur­veyed traded in stocks, es­pe­cially Hong Kong and main­landlisted ones, at least 36 times a year — yet a sig­nif­i­cant por­tion see them­selves as risk-averse.

The lack of a mid­dle ground be­tween fre­quent spec­u­la­tive trad­ing in stocks and a cash-heavy port­fo­lio is a mar­ket gap Charles Sch­wab could spare no ef­fort to fill in, ob­served Sun.

What emerg­ing af­flu­ent main­land in­vestors need is a long-term in­vest­ment plan with a glob­ally di­ver­si­fied port­fo­lio, in tune with their risk tol­er­ance and in­vest­ment ob­jec­tives.

But what mat­ters more is whether such HNWIs re­al­ize that they need to in­vest more re­spon­si­bly rather than be bent on mak­ing a for­tune overnight or sim­ply bury­ing all their money in cash or bank­ing ac­counts, added Sun.

Sun feels it is the re­spon­si­bil­ity of mar­ket lead­ers in the re­gion to en­cour­age in­vestors to com­mit and take own­er­ship of their fi­nan­cial fu­ture by em­brac­ing healthy and pro­fes­sional in­vest­ment prac­tices. The need for greater in­vestor ed­u­ca­tion and a higher level of fi­nan­cial lit­er­acy in the re­gion is also seen to trans­late into good op­por­tu­ni­ties for Charles Sch­wab and the in­dus­try as a whole.

“Nur­tur­ing in­vestor ed­u­ca­tion, which re­mains at a ger­mi­nal stage on the main­land, is what we des­per­ately want to do on the main­land, what we are do­ing in the re­gion and what we have been do­ing in Hong Kong for many years,” Sun pointed out. Con­tact the writer at sophia@chi­nadai­

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